Some businesses see employee costs such as wages and salaries as an expense. But others see employees as vital resources that can give them a real competitive ad- vantage. Darden Restaurants falls clearly in the second set. Darden operates such popu- lar eateries as Olive Garden, LongHorn Steakhouse, Capi- tal Grill, and others. All told, the firm has about 150,000 employees and 1,500 restau- rants (all company owned, not franchised). Darden has been named one of the best companies to work for in America by Fortune magazine, the only restaurant business that’s ever made this list. The firm’s annual employee turnover is about 20 percent lower than its industry average, and many Darden top managers started at the bottom and worked themselves up the corporate ladder. In fact, that is one major reason that Darden’s employees enjoy working there so much.
Take Mike Stroud, for example. Stroud started as a busboy at a Red Lobster in Georgia in 1973 (at the time Red Lobster was owned by Darden but was recently sold to a private investment group). Today, he is a senior vice presi- dent overseeing 215 locations. Likewise, Lisa Hoggs joined the company waiting tables at a LongHorn Steakhouse. Now she is a managing partner, running a $3 million location in Atlanta. About 42 percent of its employees are minorities, and 39 percent of its man- agers are women.
What’s Darden’s secret? For one thing, the com- pany tries to impress upon its employees that working for Darden can be a career and not just a job. The firm invests heavily in talent development and offers extensive career planning to all employees. The company also offers its employees an array of other meaningful benefits as well. For example, it supports a credit union that provides low-interest loans to employees, strong health-care packages, and substantial training and development opportunities. Darden recently announced plans to open 500 new restaurants in the next 5 years and hire almost 50,000 new employees. Given its track record in hiring, nurturing, and pro- moting employees, there seems to be little question that it will succeed. And who knows—Olive Garden and Capital Grill may one day soon be as common as McDonald’s and Starbucks.
1. What factors have led Darden to take its current approach to employee development and advancement?
2. Darden owns both family-oriented casual restaurants such as Olive Garden and more sophisticated upscale places such as Capital Grill. What effects might this struc- ture have for employee development?